The General Rule Under Section 150.1(2.1) of the Income Tax Act and What is a ‘prescribed corporation’? Section 150.1(2.1) of the Income Tax Act (the “Tax Act”) mandates prescribed corporations file electronic tax returns. A “prescribed corporation” is defined under s.205.1(2) of the Income Tax Regulations (the “Regulations”). Prior...
Introduction: The Residence of a Trust – Central Management and Control Test Trusts are a common and effective tax planning tool for the distribution of income amongst different recipients. A trust, which originally arose under the laws of equity, is defined as a relationship where one person, the trustee,...
Income Tax Folio S3-F1-C2, Deemed Interest Benefit on Shareholder Loans and Debts, replaces and cancels Interpretation Bulletin IT-421R2 In April 2025, the Canada Revenue Agency (CRA) issued the Income Tax Folio S3-F1-C2, Deemed Interest Benefit on Shareholder Loans and Debts, which can be relied upon as the accurate summary...
Introduction: The Office of the Taxpayers’ Ombudsperson, Its Annual Report and Its Role On June 20, 2025, the Office of the Taxpayers’ Ombudsperson (the “Ombudsperson”) published its annual report for the 2024-2025 year. The Ombudsperson’s mission is to help Canadians who have experienced service issues with the CRA. This...
Introduction: Driver Inc. and How Some Trucking Companies Operate in Canada A recent CBC news article criticized the Canadian trucking industry for its employment practices. Specifically, the article states that some trucking companies purposefully misclassify workers as independent contractors to save money on payroll taxes. The Canadian Trucking Alliance...
Overview of the debt forgiveness rules Sections 80 to 80.04 of the Income Tax Act contain the rules governing the tax consequences of debt forgiveness. These rules are designed to prevent a windfall tax benefit where a taxpayer is relieved of its obligations without recognizing income. A windfall refers...
Improvements to the CRA Authorization Request Service in Represent a Client As part of the Canada Revenue Agency’s ongoing efforts to improve service delivery by making it faster, easier, and more secure for taxpayers and their representatives, the Canada Revenue Agency has enhanced the Alternative process for individuals’ Authorization...
Introduction: Arrears Interest and the Role of Statutory Triggers in Loss Utilization In Bank of Nova Scotia v His Majesty the King, the Federal Court of Appeal (FCA) confirmed the Tax Court’s decision that arrears interest could accrue until the date of a reassessment, even in situations where a...
Introduction: What is a Retirement Compensation Arrangement? Retirement planning is a cornerstone of long-term financial security, especially for high-income earners and corporate executives whose pensionable earnings often exceed the thresholds permitted under traditional retirement savings vehicles. One such advanced planning mechanism available in Canada is the Retirement Compensation Arrangement...
Navigating Common Canadian Tax Issues in the Platform Economy The rise of the platform economy, encompassing gig work, freelancing, online sales, and short-term rentals, has created new income opportunities for many Canadians. However, with these opportunities come income tax and GST/HST tax obligations that can be complex to navigate....